MPs call for radical change to make NHS sustainable
Radical change is needed to make the NHS in England financially sustainable, MPs say.
The Public Accounts Committee (PAC) says growing deficits mean there is less money available to invest in better ways of working.
Chairwoman Margaret Hodge says of all the committee's work across government, NHS finances are her biggest worry.
The government says most trusts are forecasting a surplus, but all know "financial discipline" is important.
The PAC report concludes that NHS finances are getting worse - and it is getting harder to do something about it.
It points out that the proportion of NHS trusts and foundation trusts in deficit increased from 10% in 2012-13 to 26% in 2013-14.
The MPs say the problems are particularly bad for hospitals, with 80% of acute foundation trusts reporting a deficit half way through the current financial year, according to the regulator Monitor.
They emphasise the importance of making better use of community and primary care services to relieve pressure on hospitals, but note this will require "significant upfront investment".
However the MPs conclude there is less money available for this as more NHS organisations move into deficit.
The report highlights the added financial pressure on hospitals as a result of increased emergency admissions - up by 48% over the last 15 years.
Under the "tariff" system, trusts are paid only 30% of the normal price for emergency admissions once they exceed a set level. The remaining 70% is directed at improving care outside hospital.
This is supposed to discourage unnecessary admissions, but the MPs' report says it hinders, rather than helps, financial stability.
"These tariff arrangements do not cover the cost of admitting emergency patients, therefore intensifying the already difficult financial challenges the acute hospital sector faces."
Potential for savings
The MPs also criticise waste. They point to a sharp rise in the use of agency staff rather than permanent employees, at a typical cost - in the case of consultants - of £1,760 per day.
They also argue there is potential for savings in the amount paid under private finance initiative (PFI) schemes, which cost the NHS £1.8bn a year.
Mrs Hodge emphasised the gravity of the situation.
"From all our work across all of government, the fragility of the NHS finances causes me greatest concern."
Responding to the report, the chief executive of NHS Providers, Chris Hopson, said there was no use pretending NHS trusts could achieve the impossible, and then criticising them when they fell short.
"After five years of unprecedented price cuts, with NHS providers making more than £20bn of savings over this parliament, they can no longer guarantee safe and effective care unless they are properly and fully paid for the patients they treat.
"We have now reached the point where patient care is at risk."
In a statement, the Department of Health in England acknowledged the system was coming under pressure.
"We know the NHS is busier than ever, which is why we're increasing the budget by an extra £2bn next year to back the NHS' long-term plan to move more care from hospital to home.
"The majority of trusts are forecasting a surplus, but all NHS organisations know that financial discipline must be as important as safe care and good performance."